The commerce department released housing starts for February 2007 today, reporting that starts unexpectedly rebounded 9% from the previous month, after a 9 year low. Pouring a little cold water on the news, the Commerce department also reported that housing permits (a leading indicator to starts) were down 2.5% for February.
Lets take at look at Hitwise data, arguably a leading, leading indicators (on the theory that consumer demand for new homes starts peak online prior to permit issue). The chart below provides a year-over-year market share chart for visits to the Building and Construction category in the U.S.

Compared to last year, visits to the Building and construction category are up 3.2% for the week ending 3/17/07 when compared with the same week in 2006. The chart below compares visits to the Building Construction category (orange) with Department of Commerce housing starts (blue). Taking the two charts into consideration, even with the decline in permits, over the long-run things are looking up for new housing construction.